Polish inflation unexpectedly accelerated in April and remained above the central bank’s target for a 19th month, supporting arguments for increasing interest rates.
The headline inflation rate was 4 percent, up from 3.9 percent in March, the Central Statistical Office based in Warsaw said today. The figure was above the 3.9 median estimate of 31 economists in a Bloomberg survey. Prices rose 0.6 percent from the previous month.
The Narodowy Bank Polski raised its main rate by a quarter-point to 4.75 percent on May 9, its first increase since last June and the first such move in the European Union in 2012. Governor Marek Belka said after the decision that Poland’s economy had avoided a “significant” slowdown with inflation staying “stubbornly high.” The bank didn’t rule out further tightening.
“This gives extra ammunition to the monetary-policy hawks,” Marcin Mazurek, a senior analyst at BRE Bank in Warsaw, said by phone after the data. “What will worry policy makers is that core inflation accelerated due to higher prices for clothing and housing. Another rate increase in the second half of the year is possible.”
The zloty weakened to 4.2323 per euro at 2:15 p.m. in Warsaw, down 0.2 percent on the day. The yield on the five-year government bond rose to 5.02 percent, up 2 basis points from before the release.
Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s biggest natural-gas company, introduced new tariffs at the end of March, increasing prices for the largest industrial customers by an average of 16 percent and by 7.2 percent for households.
Consumer price growth has remained above the central bank’s 2.5 percent target since October 2010. It has exceeded the 3.5 percent upper limit of the bank’s tolerance threshold since January 2011. Poland’s economy will grow 2.7 percent in 2012, while the euro region will contract 0.3 percent, the Brussels-based European Commission forecast on May 11.
“We saw that the monthly figures weren’t showing a gradual fall in the inflation rate,” Belka said in an interview for the bank’s Obserwatorfinansowy.pl website yesterday. “The inflation rate is bouncing around 4 percent, but the important thing is its stubborn persistence at this high level.”